IVA Pros and Cons
An IVA will enable you to reduce your debts to one affordable monthly sum (based on your budget) which is usually fixed over a 60 month period. Monthly repayments can be as little as £100 per month, and after you have completed the IVA, whatever debt is remaining will be cleared, which could be up to 75%, leaving you debt free. Other benefits of an IVA include:
Advantages
- Freeze all creditor interest that you pay
- IVA will cut the amount that you owe which could be up to 75%
- Prevent creditors taking any legal action against you
- No Restrictions to obtaining personal credit
- It is a private agreement, It is not publicly advertised unlike bankruptcy
- Professional status not affected, you can continue to trade (i.e. company director, solicitor)
- One affordable monthly repayment
- Debt Free within 5 years
- An IVA will allow you to keep your House and Car
- Avoid Bankruptcy
- Your IVA will be dealt with by a licensed insolvency practitioner
Disadvantages of IVA:
- An IVA will have a negative effect on your credit rating making it difficult to obtain credit
- Failure of an IVA may result in bankruptcy proceeding
- 5 year period for an IVA compared to a maximum of 3 years with bankruptcy
- You must be able to afford a monthly payment, usually over a minimum of £100 per month
- IVAs are usually only suitable for debts over £10,000
- You will end up paying more back to your creditors than you would in bankruptcy
- All creditors must be included, you cannot make separate arrangements